Sept. 20 (Bloomberg) -- Thailand's military and police forces seized power in a coup without meeting any resistance and announced the ouster of Prime Minister Thaksin Shinawatra.

The Thai Political Reform Council said it is in control of the Southeast Asian nation of 65 million people and declared allegiance to King Bhumibol Adulyadej, according to statements read on state television. Army Chief Sondhi Boonyarataklin temporarily assumed the duties of prime minister.

The coup took place as Thaksin, 57, was in New York preparing to address the United Nations General Assembly. Thaksin has faced mounting calls for his resignation since January, when his family sold a stake in its telecommunications business for $1.9 billion without paying taxes. He has headed a caretaker government since he dissolved Parliament in February.

``Thaksin was becoming increasingly unpopular with the middle classes,'' said Sajjan Gohel, at the London-based Asia- Pacific Foundation. ``This was brewing for some time.''

There were no confirmed reports of violence. Banks, government offices and the stock exchange are closed today. Sondhi, 59, and other military leaders, including Supreme Commander Ruangroj Mahasaranon, Royal Thai Navy Chief Sathiraphan Keyanont, and Royal Thai Air Force Chief Chalit Pukbhasuk, met the king in his Bangkok palace to tell him they had ``undertaken to reform the democratic process,'' said a statement on the Web site of military television channel 5.

``The monarch is the critical factor in what will happen now,'' said David Steinberg, director of Asian Studies at Georgetown University in Washington. ``He has feuded with Thaksin, and will probably support the military.''

Baht Falls

The Thai baht dropped 1.3 percent, the most since July 2002. Standard & Poor's warned it might lower Thailand's eighth-ranking BBB+ debt rating, reflecting ``the possibility of sustained deterioration in Thailand's political situation.''

Thaksin, in New York, earlier declared a state of emergency and fired army chief Sondhi in a message broadcast on Thai state television amid reports of tank movements in Bangkok. About 32 minutes later, the coup announcement was broadcast. As news of the coup unfolded, Thaksin canceled his speech at the UN. Thaksin will leave New York shortly, said Virasakdi Futrakul, the Thai ambassador to the U.S. He didn't know Thaksin's destination.

``We have a message for the world. The prime minister has not given up power,'' Julpas Kruesopon, a Thai Rak Thai Party member in New York speaking to Cabinet members at Thaksin's hotel. ``The prime minister is not seeking asylum. The situation is calm in Bangkok. People are going back to work. Streets are quiet.''

Coup Leaders

Coup leaders broadcast that they have suspended the constitution and dissolved the Cabinet, Senate and the constitutional court. In most ministries, permanent secretaries will take over temporarily, they said. They pledged allegiance to the king. Machine guns and tanks are adorned with yellow ribbons, a symbolic color of the monarch.

U.S. officials urged Thais to resolve their difference in accordance with the law and to avoid bloodshed.

``The important thing is to look for sustaining the constitutional processes in Thailand,'' U.S. Ambassador John Bolton told reporters yesterday at the UN. Gonzalo Gallegos, a State Department spokesman, said the U.S. is ``monitoring developments closely.''

Return to Normal

The Thai military has engineered 17 coups in the past 60 years, the last time in 1991.

``Thailand has had coups for a long, long time so we're pretty used to it,'' said Mechai Viravaidya, chairman of Lam Soon Thailand and a former Thai senator. ``We believe that politics should return to normal fairly quickly because they (the coup's leaders) clearly stipulated that we need some good, solid, quick political reforms and then return to democracy.''

One broadcast by the Thai military said coup leaders wanted to return ``power to the people'' and didn't seek power for themselves. They cited government corruption as one of the reasons for the coup.

Troops supported by tanks early today closed roads leading to Government House in downtown Bangkok, where Thaksin's offices are located, allowing only residents to access their homes. Last, night two tanks blocked the main entrance to the government office. Three other tanks were stationed outside the UN building.

An eight-hour television media blackout that prevented any foreign channels from broadcasting and forced Thai stations to only air coup statements will end after Sondhi reads a statement scheduled at 9 a.m., state media announced.

Caretaker Government

Thailand has had a caretaker government unable to enact new policies since Thaksin dissolved Parliament in February. He called for an April vote in an attempt to end street protests in Bangkok and silence critics. The snap election was boycotted by the country's three biggest opposition parties and later annulled by a court.

New elections had been expected to be held in November. Thaksin had pledged to lead his Thai Rak Thai party through the vote and insisted he hadn't decided whether he would return as premier should his party win.

The Thai army has been trying to control insurgents in three mainly Muslim southern provinces trying to establish an independent Islamic state. More than 1,200 civilians and government officials have been killed in the attacks in the region since January 2004. About 90 percent of Thailand's population is Buddhist. Sondhi is a Muslim.

Economic Forecast

The political uncertainty has taken a toll on Thailand's $188 billion economy, the second-largest in Southeast Asia after Indonesia. The Asian Development Bank this month cut its forecast for Thailand's growth this year to 4.2 percent from 4.7 percent, citing political turmoil.

Thaksin was first elected premier in 2001 after founding Thai Rak Thai -- or Thais Love Thais -- and was returned with a record majority in February 2005. The self-described ``CEO prime minister'' won favor with Thailand's rural voters after declaring a moratorium on debt owed by many farmers and giving money to every village.

Thai police on Aug. 24 defused a bomb that they said was intended to kill Thaksin in a car abandoned near the premier's house. At least five military officials have been arrested in relation to the alleged assassination plot.

To contact the reporters on this story: Beth Jinks in Bangkok at bjinks1@bloomberg.net; Laurent Malespine in Bangkok at lmalespine1@bloomberg.net.

Last Updated: September 19, 2006 22:21 EDT